IT’S AN ODD PHENOMENON THAT IN CHINA we don’t trust the initial price. To Westerners this can appear self defeating. After all, why would you begin a relationship with a new client by trying to cheat them? And this is why many foreigners negotiating in China feel uncomfortable in this scenario. The reality is that this tactic isn’t going to change anytime soon, so the sooner you can overcome this initial discomfort the sooner you partake in the negotiation game.
I started playing the game early in life, by buying books.[quote float=”left”]These tricycle salesmen were also quite ruthless, regardless of one’s age.[/quote]There was a weekend market near my home to which my mum would sometimes take me. Not all the sellers had fixed shops; some had tricycles, stacked high with books. These were where the bargains could be found. These tricycle salesmen were also quite ruthless, regardless of one’s age. My mum would give me a small budget to use each time and the first few times I would spend it all on just one book. After a few experiences, by watching the adults negotiating, I learned how to barging more effectively.
This is what I learned.
Firstly, I discovered that it was in the timing. I would visit the sellers towards the end of the market opening hour, as the seller became more anxious at running out of time. This worked. With the same budget, I was able to double or triple my purchases. By using timing to my advantage I was able to make the older, more experienced sellers drop their prices.
Have a BATNA
The second tactic I used was to have a BATNA. Coined by Roger Fischer and William Ury, BATNA stands for ‘Best Alternative to a Negotiated Agreement’. Or in other words, what will you do if the negotiation falls apart?
At the bookstore I would tell myself, if I cannot get the price I planned, I will just try another tricycle or another weekend. Thankfully, there were many tricycles, and I had many weekends before me. Once I realised this, again, I was able to walk away and double or triple my purchases.
During the initial diagnosis stage of a Sales and Negotiation Skills training program, when I interview the trainees, I uncover that all are familiar with researching the market trends, analysing sales data, building bridges to connect with decision makers and cultivating the client relationship. [quote float=”right”]However, few are aware of their BATNA[/quote]However, few are aware of their BATNA. No matter how well you prepare, difficult people and problems will arise. My question here is, “At the beginning stage of the negotiation, how much time are you spending with your team to plan and decide the alternatives? Do you have a clear BATNA?”
Knowing one’s BATNA will define one’s confidence moving forward in a negotiation. This is where I can draw from one of the books that I successfully negotiated, many years ago, from one tricycle book seller. It was a book by Lee Childs, author of the Jack Reacher series, made famous today by Tom Cruise. Childs describes his character, Reacher, as saying, “Hope for the best, plan for the worst.” This is the essence of BATNA.
To analyse your BATNA, think about all the alternatives available to you should the current negotiation ends in an impasse. What are your no-deal options? Even the most sophisticated negotiators often fail to think through the other party’s perception objectively and assess their BATNA with all possible points.
My personal experience, at ClarkMorgan, is to start with asking these few questions:
– What will my client do without a deal?
– Where are we within the vendor ranking?
– What does the client like about ClarkMorgan as a service partner and, me personally, as a contact window?
I then look at my client’s neediness.
Reduce Neediness to Build Leverage
We all know of couples who are unbalanced, with one partner more needy than the other. People who have a needy partner can do whatever they want, because although needy people do complain, they cannot walk away. [quote float=”left”]And power, in a negotiation, is called ‘leverage’.[/quote]They give away any kind of power they have in the relationship, which creates a power imbalance. Being the needy partner in a negotiation means you have no power. And power, in a negotiation, is called ‘leverage’.
So how can we appear less needy? Simple, we just need to plan early. It is all about preparation. There’s no better position to be in when negotiating a price than to know what it costs the company on the other side of the table to make what they are selling. By figuring out the cost to make the product, you then have a much better idea of how much wiggle-room you have in regards to negotiating.
But these facts and figures need time to collect. Therefore, the more time and manpower invest to gather information, determine your negotiable factors, assess your goals and consider the past negotiation trends with this party, the more confident you will usually appear when emotionally connecting with your opponent. And of course, if you are able to walk away, then you demonstrate that you are not needy. This was my final strategy, when buying books. I would just flip through pages, nonchalantly, and not show too much interest – even if I couldn’t wait to get the book home.
I still enjoy buying books, either online or in the actual bookstore. I negotiate whenever I can. As I believe that in business as in life, you do not get what you deserve, but you get what you negotiate. For this reason, I am always prepared to walk away. I’ve got a huge stockpile of books to read anyway. That’s my BATNA.